HOWARD MILLER,
†††††††††††††††††††††††††††††††††††††
OPINION AND ORDER

Respondent.

Respondent Howard Miller ("Miller") appeals
from the decision of the Administrative Law Judge ("ALJ")
imposing a civil penalty of $50,000 on Miller for fraud in connection
with solicitations to customers to buy and sell commodity options in
violation of the Commodity Exchange Act ("Act") and the
Commissionís Rules. We vacated the ALJís previous assessment of
a civil penalty of $200,000 after finding that the ALJ had failed to
articulate how the penalty was calculated. In re Miller,
[1994-1996 Transfer Binder] Comm. Fut. L. Rep. (CCH) ∂ 26,440 (CFTC
June 16, 1995). Miller argues on appeal that even this reduced penalty
amount is unduly excessive in light of the gravity of his violations, and
that his net worth is insufficient to pay the civil monetary penalty. He
urges us to vacate or to reduce the penalty.

BACKGROUND

1. The Complaint

On November 19, 1991, we issued a one-count complaint
charging Miller with multiple violations of the Act and the
Commissionís Rules arising out of his solicitation activities while
employed as an account executive for a futures commission merchant
("FCM") from January 1987 though April 1991. The complaint
charged that Miller, a registered associated person ("AP"),
violated the Act and Commission Rules by committing fraud while
soliciting customers to buy and to sell commodity options on behalf of
Siegel Trading Company ("Siegel"), a registered FCM. The
complaint asserted that, in connection with his solicitation of customers
for Siegel, Miller cheated, deceived, and defrauded customers in
violation of Section 4c(b) of the Act, 7 U.S.C.ß 6c(b) (1988), and
Commission Rule 33.10, 17 C.F.R.ß 33.10 (1997), by making false,
deceptive or misleading representations or omissions of material facts.
The alleged misrepresentations and omissions concerned: (1) the
likelihood of profits from trading in options; (2) the risks involved in
trading commodity options; and (3) the performance record, experience,
and expertise of Miller and Siegel. Millerís answer denied any
wrongdoing.

2. The First Hearing

The ALJ held three days of hearings in November 1993.
The Division called seven customer witnesses who testified concerning
their solicitation by Miller, and a Commission investigator who testified
regarding her analysis of the trading results of Millerís customers.
The customers testified that, in the course of soliciting them to open
accounts with Siegel and to purchase specific options, Miller made a
number of claims using phrases such as "this is a sure thing"
that led them to believe that they easily could double or triple their
money in a short period of time. Hearing Transcript ("Tr.-1")
at 13-16, 18-19, 34, 63, 69-70, 84-85, 89, 94, 107, 120, 123, 127, 141,
190, 194, 214, 236-37; Division Exhibits ("D1-Ex.") 5, 11,
14-3. The customers also testified that Miller minimized or failed to
disclose the risks involved in commodity options trading, and told them
that he had a great investment track record and that all or most of his
customers were making money, Tr.-1 at 19-20, 39-41, 69, 89, 142, 147-48,
194. In addition, customers testified that Miller told them that the risk
disclosure statement, which was communicated to customers via a taped
verification telephone procedure, was merely a "formality."
Tr.-1 at 18-19, 34, 132; D1-Exs. 14-3, 19-24.

Commission investigator Tena Friery
("Friery") testified concerning the performance record of
Millerís customers based upon an analysis she made of Siegelís
trading records. Tr.-1 at 167-176. Her analysis revealed that from
January 1, 1984, to July 31, 1989, nearly 80 percent of Millerís
customers lost money trading options. D1-Ex. 11. In addition, Friery
provided evidence regarding trading losses incurred by Millerís
customers and the commissions derived from Millerís trades during
that period. D1-Ex. 21.

Millerís defense consisted of his own testimony
and that of his assistant, Jennifer Nicole Martin ("Martin"),
at Siegel. Miller denied that he told customers they could double or
triple their money or that he guaranteed they would profit. Tr.-1 at 302.
He also claimed that he informed his customers that more than 80 percent
of all commodity speculators lose money. Tr.-1 at 304-306. Martin
testified that Miller explained all risks, commissions, and other
relevant factors to his customers. Tr.-1 at 274-83.

3. The Initial Decision

In his initial decision, the ALJ found that, while the
customers testified honestly, Millerís testimony was unreliable and
evasive, and Martinís testimony lacked credibility. In re
Miller, [1992-1994 Transfer Binder] Comm. Fut. L. Rep. (CCH) ∂
26,084 at 41,598 (ALJ May 25, 1994). He further found that Miller:
fraudulently induced customers to invest in commodity options by making
false, deceptive or misleading statements of material fact, and by
failing to disclose material facts to potential customers; knowingly
concealed the truth from his potential customers to induce them to
purchase commodity options; deliberately misled customers as to
reasonable expectations of profit on commodity options; had no basis in
fact for the recommendations he made to customers; had one objective in
mind, to induce the customers to open an account and trade, thus making a
commission for Miller; and used such phrases as a "no miss
proposition", and "a sure thing" and assurances that
customers would triple their investment to lead customers to believe that
there was negligible risk in investing in these instruments. Id.
The ALJ also found that when Miller solicited his customers he knew that
nearly 80% of his customers lost money, and that none of his customers
tripled their investment. Id. In light of Millerís conduct,
the ALJ found it unsurprising that during 1987 and 1988 alone, Miller
made in excess of $1,000,000 in commission income while his customers
lost $887,000. Id. The ALJ concluded that "Miller engaged in
a scheme to cheat and defraud customers and to make large commission
profits at the expense of his customers. Miller proved to be an expert
not on how to invest in commodity options, but rather in how to deceive
and defraud customers for his own benefit." Id.

Based on these findings, the ALJ held that Miller
violated Section 4c(b) of the Act and Commission Rule 33.10 by
fraudulently inducing customers to invest in commodity options.
Id. As sanctions, the ALJ ordered Miller to cease and desist from
further violations, revoked his registration as an AP, issued a permanent
trading prohibition, and imposed a civil monetary penalty of $200,000.
Id.

4. The First Appeal

Both sides appealed the Initial Decision. In addition
to challenging the ALJís liability analysis, Miller argued that the
sanctions imposed by the ALJ were unwarranted and excessive. Resp. App.
Br. at 42-45. The Division defended the ALJís liability analysis and
the nonmonetary portion of the sanctions. Concerning the civil monetary
penalty, however, the Division argued that the ALJís civil monetary
penalty analysis failed to consider either the financial benefit that
Miller derived from his wrongdoing or the losses that his customers
suffered. It urged us to vacate the ALJís civil monetary penalty and
instead to impose one of at least $1,200,000, the amount of commission
income that the Division asserted Miller earned from January 1987 to July
1989. Div. App. Br. at 10-12; DOE Ex. 21; Tr.-1 at 175-176.

On June 16, 1995, we affirmed the ALJís liability
analysis and all of the sanctions except the civil monetary penalty.
In re Miller, [1994-1996 Transfer Binder] Comm. Fut. L. Rep. (CCH)
∂ 26,440 (CFTC June 16, 1995). We explained that, at the time the
complaint was issued, Section 6(d) of the Act provided that if a civil
monetary penalty were to be imposed it was required to be based on the
gravity of the respondentís violations with consideration for his
net worth. Id. at 42,912. As the ALJ did not follow the procedures
established by Commission precedent to develop the record on these
issues, we found that a civil monetary penalty could not be imposed on
the existing record, vacated the ALJís civil monetary penalty, and
remanded the matter to the ALJ for further proceedings. Id. at
42,913-42,914.

In remanding the matter, we instructed the ALJ to: (1)
assess the gravity of Millerís violations including any factors that
aggravated or mitigated his conduct; (2) consider the appropriateness of
any penalty in light of Millerís net worth; (3) look to
Commission-approved penalties in analogous cases, and if there were no
analogous cases, use as a starting point either the financial benefit
that accrued to respondent or the losses suffered by his customers as the
result of his wrongdoing; and (4) develop the record and determine an
appropriate civil monetary penalty in accordance with Commission
precedents such as In re Gordon, [1992-1994 Transfer Binder] Comm.
Fut. L. Rep. (CCH) ∂ 25,667 (CFTC Mar. 16, 1993), and In re
Murlas, [1987-1990 Transfer Binder] Comm. Fut. L. Rep. (CCH) ∂
24,440 (CFTC Mar. 16, 1993). Miller, ∂ 26,440 at
42,912-42,193 and n.5.

5. The Net Worth Hearing

Both the Division and Miller requested a hearing
concerning the civil monetary penalty. On August 17, 1995, the ALJ
scheduled the hearing for December 12, 1995. The hearing was later
rescheduled to January 1996 at Millerís request. Also, in August
1995, the Division requested, and the ALJ issued, a subpoena to Miller
ordering him to bring all his financial records to the hearing, including
tax returns from 1987 to 1994, check registers, materials relating to
indebtedness, and other records relating to his ability to pay a civil
monetary penalty. The Division also subpoenaed financial records from
Millerís current employer, Star Commodities, Ltd.
("Star"), and from Siegel. The hearing was held on January
25-26, 1996.

At the hearing, Miller submitted only partial tax
records and failed to produce most of the financial records that were
required under the subpoena such as check registers and records of
expenditures. Net Worth Hearing Transcript ("Tr.-2") at 10-12,
22, 23, 27-32, 34, 88, 100; Division Exhibits ("D2-Ex.") 1,
4-10. He provided no documentation concerning his liabilities other than
a handwritten list of debts that he claimed he owed to various financial
institutions. Respondent Exhibit ("R2-Ex.") 3. The Division
questioned Miller regarding his income and assets from 1987 until the
hearing date, including his purported disposition of significant assets,
i.e., his residence and his half ownership in M&B Trading
Company ("M&B). Tr.-2 at 16-50, 54, 56-62, 90-95.

Miller presented the testimony of two former
customers. One of the customers traded with Miller only after the period
in question. Tr.-2 at 81. The other customerís testimony was
presented through a stipulation of expected testimony. The stipulation
stated that the customer had traded with Miller during an unspecified
time at Siegel and at Star. Tr.-2 at 110. Both customers believed that
they had not been defrauded by Miller. Tr.-2 at 77-82, 110.

In its post-hearing brief, the Division provided
estimates with respect to customer loss, Millerís commission income,
and his net worth. The Division estimated that between January 1, 1987
and July 31, 1989, Millerís customers lost $1,350,623. Division
Brief in Support of Proposed Findings of Fact and Conclusions of Law and
in Support of Civil Monetary Penalty (Apr. 16, 1996) at 11
("Division Post Hearing Br."). Next, the Division estimated
Millerís commission income from Siegel for the years 1988 through
1991 to total $637,771.91. Division Post Hearing Br. at 12-13; D2-Ex. 2.
Finally, based on the evidence presented at the hearing, the Division
estimated Millerís net worth to be at least $1,037,137, exclusive of
his residence. Division Post Hearing Br. at 17, 20. Citing Millerís
failure to provide complete and accurate financial information in
response to its subpoenas and his failure to provide honest statements
regarding his financial condition, the Division argued that Miller had
forfeited his right to have his net worth considered in assessing a civil
monetary penalty. Id. at 14. It therefore urged the ALJ to assess
a penalty based solely on the extreme gravity of Millerís
violations, which it argued should be based on all of the losses by
Millerís customers during the period of his wrongdoing ($1,350,623).
Id. at 19, 24. Alternatively, the Division argued that the civil
monetary penalty should be based on the benefits (i.e.,
commissions) received by Miller from his wrongdoing ($637,000), which it
said was appropriate in light of Millerís net worth as calculated by
the Division ($1,037,137). Id. at 20-21.

By contrast, Miller maintained that his violations
were not sufficiently grave to warrant a civil monetary penalty.
Millerís Posthearing Brief and Proposed Findings of Fact and
Conclusions of Law (May 16, 1996) at 7-15 ("Resp. Post Hearing
Br."). Miller further asserted that: (i) any civil penalty would be
inappropriate, as he already had been penalized sufficiently through the
other sanctions imposed, id. at 4, 28; (ii) the other sanctions
had effectively deterred him and others from future wrongdoing,
id. at 4; (iii) he sufficiently demonstrated at the hearing that he
had little ability, if any, to pay a civil monetary penalty, id.
at 15-20 (citing Tr.-2 at 104-107); (iv) he had submitted evidence which
showed that his net worth was actually negative, id. at 17 (citing
D2-Exs. 1 and 11; R2-Exs. 1 and 3); (v) he had complied with the
Divisionís subpoena by providing the documents he "had in his
possession, custody and control," and had never refused to produce a
requested document, id. at 19; and (vi) if a civil monetary
penalty were imposed, it should be based solely on the losses suffered by
the seven witnesses who testified at the hearing below, id. at
6.

6. The Initial Decision on Remand

The ALJís initial decision on remand reduced
Millerís civil monetary penalty from $200,000 to $50,000. In re
Miller, [1994-1996 Transfer Binder] Comm. Fut. L. Rep. (CCH) ∂
26,722 (ALJ June 21, 1996). The ALJ first addressed the gravity of
Millerís offenses. Noting that the gravity of Millerís
violations had been established in the first initial decision, the ALJ
reiterated that Miller had "intentionally engaged in a scheme to
cheat and defraud his customers for the purpose of gaining large
commissions," a violation of the core provisions of the Act
warranting serious sanctions. Id. at 43,994-43,995. He emphasized
that Miller "should not be permitted to financially benefit from his
wrongdoing," and therefore, it was necessary to impose a civil
monetary penalty. Id. at 43,994.

Addressing the financial benefit that Miller derived
from his wrongdoing, the ALJ rejected the Divisionís view that it
should be based on Millerís earnings at Siegel on the ground that
the Division had "failed to show a direct correlation between
Millerís fraudulent acts and the commissions he gained."
Id. at 43,995. The ALJ similarly rejected the Divisionís
argument that the amount of customer harm (which the Division estimated
at $1.35 million) was at least equal to all losing trades made through
Miller from 1987 to 1989. By contrast, the ALJ accepted Millerís
argument that the relevant harm should be limited to the losses suffered
by the seven customers who testified at the first hearing, and held
Miller responsible only for those losses, which the ALJ estimated to
total $100,000. Id.

Turning to Millerís net worth, the ALJ did not
address Millerís failure to produce a substantial portion of the
documents requested under the subpoena, simply stating that
"[n]umerous financial documents were produced at the hearing in an
attempt to determine Millerís net worth." Id. at 43,996.
The ALJ rejected the Divisionís contention that Millerís net
worth should be based on the total commission income he earned during the
period alleged in the Complaint, concluding that such an assessment was
not supported by financial records. Id. The ALJ also rejected
Millerís claim that his net worth was negative. Id. Stating
that the evidence presented at the hearing indicated that Millerís
assets had declined since the period charged in the complaint, and that
the revocation of Millerís registration and the imposition of a
trading ban reduced Millerís earning power, the ALJ set
Millerís net worth at "approximately $50,000." Id.
The ALJ did not explain how he had arrived at this amount, stating only
that evidence and testimony presented by both parties led to this
conclusion. Id. The ALJ then imposed a civil monetary penalty of
$50,000. Id.

7. The Second Appeal

Only Miller appeals the ALJís initial decision on
remand. The sole issue on appeal is the appropriateness of the $50,000
civil monetary penalty imposed by the ALJ in his initial decision on
remand. Miller does not challenge the ALJís net worth determination,
but argues that the imposition of a $50,000 civil monetary penalty
constitutes "prejudicial and reversible error" because it
"would deprive him of any asset that he may have to live on."
Resp. Br. at 4, 6. He maintains that a monetary penalty in an amount
equal to his net worth "is unduly excessive and inconsistent with
Commission precedent." Id. at 4. Finally, Miller asserts that
his assets are "insufficient" to satisfy the ALJís civil
penalty. Resp. Br. at 19.

DISCUSSION

We review the imposition of sanctions de novo.
In re Grossfeld, [Current Transfer Binder] Comm. Fut. L. Rep.
(CCH) ∂ 26,921 at 44,467 (CFTC Dec. 10, 1996). Our analysis focuses
on what the appropriate sanctions are in a given case in light of the
facts and circumstances, not on the quality of the ALJís assessment.
Id.

In enforcement proceedings we impose sanctions
"to further the Actís remedial policies and to deter others in
the industry from committing similar violations." In re Volume
Investors Corp., [1990-1992 Transfer Binder] Comm. Fut. L. Rep. (CCH)
∂ 25,234 at 38,679 (CFTC Feb. 10, 1992). We do not rely on a
specific formula to determine the appropriate level of a civil monetary
penalty. Grossfeld, ∂ 26,921 at 44,467. Instead, we look to
the total facts and circumstances of the case and focus on the relative
gravity of the respondentís misconduct. Id.

To determine the gravity of the respondentís
misconduct, we consider a number of factors. First, we consider the
relationship of the violation to the regulatory purposes of the Act.
Id. Conduct which violates core provisions of the Act, i.e.g.,
defrauding customers, is very grave even if there are mitigating
circumstances. Id. at 44,468 and n.28; In re Premex,
[1987-1990 Transfer Binder] Comm. Fut. L. Rep. (CCH) ∂ 24,165 at
34,890 (CFTC Feb. 17, 1988). Second, we consider the respondentís
state of mind to determine whether the violations were knowing or
unintentional, widespread and continuous or isolated. Grossfeld,
∂ 26,921 at 44,467 and n.29; Premex, ∂ 24,165 at 34,891.
Third, we consider the respondentís post-violation conduct,
including whether he cooperated with the authorities and whether he
attempted to cure the violations and provide restitution.
Grossfeld, ∂ 26,921 at 44,468 and n.31; Premex, ∂
24,165 at 34,891. Fourth, we consider the consequences flowing from the
violative conduct, including the benefits to the respondent (his
commissions) and the losses to customers. Grossfeld, ∂ 26,921
at 44,468 and n.30; Gordon, ∂ 25,667 at 40,182;
Premex, ∂ 24,165 at 34,891. In fraudulent solicitation cases,
such as this, the amount of a civil monetary penalty is based on these
amounts, with adjustments up or down in light of the other factors
addressed here. Gordon, ∂ 25,667 at 40,182. Finally, as the
enforcement action in this case was filed before October 29, 1992, the
effective date of the Futures Trading Practices Act of 1992, P.L. 102-546
("FTPA"), unless the respondent waives his right to have his
net worth considered under former Section 6(d) of the Act, 7 U.S.C.
ß 9a (1992), we also must consider his net worth before imposing a
civil monetary penalty. Grossfeld, ∂ 26,921 at 44,466;
Murlas, ∂ 24,440 at 35,930 and n.11; In re Nelson Ghun,
[1984-1986 Transfer Binder] Comm. Fut. L. Rep. (CCH) ∂ 22,584 at
30,525 and n.2 (CFTC May 2, 1985); In re Rothlin, [1982-1984
Transfer Binder] Comm. Fut. L. Rep. (CCH) ∂ 21,851 at 27,574 (CFTC
Dec. 21, 1981).

As Millerís misconduct involved fraudulently
inducing his customers to trade in commodity options, it violated a core
provision of the Act. His misconduct was certainly serious.

As we stated below, the record establishes that Miller
engaged in a pattern of wrongdoing that extended over several years.
Miller, ∂ 26,440 at 42,914. In addition, his misrepresentations,
which included guaranteeing profits, promising wildly exaggerated
returns, minimizing risks, and misrepresenting his experience and record,
were egregious. Seeid. at 42,914 and n.1. The record also
establishes that Millerís misconduct was widespread and continuous.
The witnesses presented by the Division testified that they did not
invest with Miller until they received repeated cold calls from him.
Tr.-1 at 11-13, 84-85, 147, and 234. There is no basis to conclude that
Miller acted differently with the numerous other customers whom he
solicited at Siegel. Based on these facts we conclude that Millerís
misconduct was intentional, widespread and continuous.

There is no evidence that Miller was cooperative with
the authorities or has attempted to cure his violations and provide
restitution to his customers. In fact, Miller was evasive and deceptive
at both hearings, and has not made any attempt to provide restitution.
Rather than being a mitigating factor, his post-violation conduct
aggravates his misconduct.

Miller profited substantially from his misconduct.
From 1988 through 1991, according to his IRS Forms 1099, Miller received
$637,519.94 in commissions from Siegel. D2-Ex. 2. Millerís gains
from his wrongdoing were even greater than this figure. Millerís
commission income for 1987 is not included, as no information was
available for that year.

Millerís customers suffered significant losses
due to Millerís misconduct. From January 1, 1987 through July 31,
1989, Millerís customers suffered $1,351,623 in out-of-pocket
losses. See D1-Ex. 21. This figure seriously underestimates the
losses suffered by Millerís customers, as it does not include their
losses for 1990 through 1991 and the last five months of 1989.

The final factor in this analysis is Millerís net
worth. The Section 6(d) net worth determination is intended to protect
respondents from the imposition of excessive monetary penalties in
relation to their financial resources. Murlas, ∂ 24,440 at
35,930; In re Rothlin, [1982-1984 Transfer Binder] Comm. Fut. L.
Rep. (CCH) ∂ 21,851 at 27,573 (CFTC Dec. 21, 1981). Once a
respondent is notifiedaware that his net worth is likely to be a material
issue in an enforcement proceeding, he has the burden to invoke Section
6(d) of the Act and then to demonstrate the level ofwhy the contemplated
civil penalty that would beis excessive in light of his financial
circumstances. Grossfeld, ∂ 26,921 at 44,465-44,466;
Murlas, ∂ 24,440 at 35,930; Rothlin, ∂ 21,851 at
27,573. The burden of production for this purpose rests with the
respondent because he generally controls the information or records
directly probative of his financial condition. Grossfeld, ∂
26,921 at 44,466; Murlas, ∂ 24,440 at 35,930-35,931;
Rothlin, ∂ 21,851 at 27,573. If the Division disagrees with the
respondentís net worth showing, it then has the right to discover
financial information from the respondent and to a hearing to ensure
development of an adequate record on net worth. Grossfeld, ∂
26,921 at 44,466; Murlas, ∂ 24,440 at 35,930-35,931. Failure
of the respondent to cooperate in this process is considered a waiver of
the opportunity available under Section 6(d). Grossfeld, ∂
26,921 at 44,466; Murlas, ∂ 24,440 at 35,930; Nelson
Ghun, ∂ 22,584 at 30,525 and n.2; Rothlin, ∂ 21,851
at 27,573.

Miller was on notice that his financial condition was
at issue long before the net worth hearing in January 1996. In his
initial appeal with the Commission, filed on July 7, 1994, Miller
asserted that the ALJ erred by not holding a net worth hearing. Resp.
App. Br. at 45. Miller again raised this issue in his Answer to the
Divisionís Appeal, filed on August 15, 1994. Respondentís
Answering Brief at 18. On August 7, 1995, Miller formally requested a net
worth hearing. Also in August 1995, the Division subpoenaed Miller,
requiring him to produce at the hearing, among other things, all of his
individual income tax returns and related documents for 1987 through
1994, all documents in his possession, custody or control relating to
bank and retirement accounts, investments, pensions, insurance,
promissory notes, debts owed to or by him, and transfers of property or
assets. On August 17, 1995, the ALJ scheduled the hearing for December
12, 1995. The hearing was later rescheduled to January 1996 at
Millerís request. The Division issued an identical subpoena
requiring the documents to be produced on the new hearing date.

At the net worth hearing, Miller produced hardly any
financial records, despite having beenbeing subpoenaed twice by the
Division, having had more than four months to gather the documents, being
told by his attorney exactly which documents were required, and having
knownknowing that the purpose of the hearing was to determine his ability
to pay a civil monetary penalty. Tr.-2 at 23, 32. On the first day of the
hearing, Miller showed up without any of his personal tax records.
When asked why, Miller simply stated, "I did not bring any of my
personal tax returns, because my accountant had been out of town and I
wasnít able to get any copies of it (sic)." Tr.-2 at 11. Even
when Miller produced some income tax returns the next day after
requesting them from his accountant, he did not provide tax returns for
1987, 1988, or 1989. He also failed to produce any records showing his
income for 1995. Miller did not produce any banking, retirement account,
investment, pension, insurance, or debt documents. Miller asserted that
he did not produce any personal checks or check registers because he does
not keep them. Tr.-2 at 30.

Furthermore, the documentation provided by Miller was
contradictory and unreliable. While on a Financial Statement of Debtor
Form ("Debtor Form") submitted by Miller to the Commission to
support a proposed settlement agreement, Miller claimed income in 1994 of
$9,820, his tax return for that year reveals income of $90,251. D2-Exs.
10 and 11. Also in his Debtor Form, Miller claims income of $23,000 for
1992, D2-Ex. 11, but does not disclose that he received $309,670 from his
pension plans that year, D2-Ex. 8. Millerís claim that his interest
in his personal residence and other assets was transferred to his wife
and children on February 1, 1993, after the complaint was filed in this
case, is substantiated only by an unwitnessed, handwritten note. R2- Ex.
2. This note is contradicted by Millerís testimony that he continues
to live in and pay the mortgage and association fees on the residence.
Tr.-2 at 28, 30, 31, 36-37. Millerís claim that he sold his 50
percent interest in M&B is contradicted by the very document that he
produced to substantiate it. Miller testified that he sold his interest
in M&B to his partner Allen Bader, and submitted R2-Ex. 2 to
substantiate this claim. This document, however, does not address a sale
or transfer of Millerís interest in M&B. Finally, Millerís
only submission concerning his liabilities was a handwritten sheet
listing amounts he allegedly owed on bank loans and credit cards. R2-Ex.
3.

In sum, we find that Miller waived his right to have
his net worth considered in determining an appropriate civil monetary
penalty. He was fully informed both that he was facing a civil monetary
penalty and of the procedure which would be followed under our precedent
and Section 6(d) of the Act. SeeRothlin ∂ 21,851 at
27574. Millerís failure to cooperate by producing the requested
documents and to make the showing contemplated by Section 6(d)
constitutesd a waiver of his right to have his net worth considered. Even
if Miller had not waived his right to have his net worth considered, we
find that his net worth exceeds $600,000.

In light of all of the factors addressed above, we
assess a civil monetary penalty of $600,000 against Miller.

CONCLUSION

The ALJís decision imposing a $50,000 civil
monetary penalty is vacated. The $600,000 civil monetary penalty, cease
and desist order, permanent trading prohibition, and revocation of
Millerís registration as an associated person shall become effective
30 days from the date this order is served.

IT IS SO ORDERED.

By the Commission (Chairperson BORN, Commissioners
TULL, HOLUM and SPEARS).